Local biotech stocks soaring in 2014

One of biggest gainers wasn't even publicly traded when year began

With the year well under way, it's a good time to check how local life science stocks are doing. In a number of cases, San Diego biomedical stocks have risen spectacularly. Moreover, these double-digit increases include the largest life science companies by market value.

Even more impressively, Illumina, the San Diego area's biggest biotech company, with a market value exceeding $20 billion, is up nearly 50 percent in 2014 to date. Shares closed Friday at $164.33. Illumina made a big impression at the JPMorgan Healthcare Conference in San Francisco in January, when it announced a system that can sequence human genomes for a cost just under $1,000 each, when run in large volumes. That system cost $10 million. In addition, Illumina announced less expensive systems that also provide increased genome sequencing power.

Auspex, a maker of drugs made more longer lasting with deuterium, has risen more than 50 percent since its initial public offering in early February.— Yahoo Finance

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Auspex, a maker of drugs made more longer lasting with deuterium, has risen more than 50 percent since its initial public offering in early February.
/ Yahoo Finance

One of the biggest gainers wasn't even publicly traded when the year began. Auspex Pharmaceuticals, which went public in early February, is up more than 52 percent since its IPO at $12 per share. Auspex closed Friday at $23.93. The company is developing a drug to treat chorea, a movement disorder in those with Huntington's disease. The company has modified an existing drug to last longer in the body, by substituting hydrogen at strategic places in the molecule with deuterium, a hydrogen isotope nearly twice as heavy.

Booth referenced both Auspex and Concert Pharmaceuticals, based in Lexington, Mass. But there was a difference from the VC perspective, Booth said: Auspex VCs got about a 5 times return on investment, while Concert's got about 1.5 times.

Shares of Isis Pharmaceuticals are up more than 30 percent in 2014 to date.— Yahoo Finance

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Shares of Isis Pharmaceuticals are up more than 30 percent in 2014 to date.
/ Yahoo Finance

Isis Pharmaceuticals, a maker of drugs with its gene-blocking antisense technology, is up more than 30 percent so far in 2014. Isis now has a market cap of $6 billion. Isis has long been a biotech leader in making huge deals to develop drugs with big pharma, but its stock price has lagged in a way Isis CEO Stanley T. Crooke couldn't explain. Now he -- and longtime Isis shareholders -- can breathe easier.

Other notable gainers include Ligand Pharmaceuticals, up nearly half since the year's beginning, and Receptos, up about 43 percent.

Of course, some local stocks have lost value as well, including Organovo Holdings, down about 14 percent. But that stock is still up about 100 percent from a year ago. The company is developing 3D biological printing products. Its flagship product is bioprinted human liver cells, which it intends to put on the market later this year for use in drug toxicology screening.

Diagnostics maker Quidel Corp. is down about 5 percent year to date, but up about 23 percent from a year earlier.

To give a base for comparison, the Nasdaq Biotechnology Index has risen 13.4 percent year to date.

Biotech VC Booth discussed the biotech IPO market on his blog, charting their performance. He noted that a number of recently public biotechs haven't done so well. The chart shows that most of the IPOs over the last 12 months trade above their offering price. But some are trading below their IPO price.

"Many of the laggards on the IPO chart above are stories that couldn’t get sold privately so went the route of the IPO because the window opened – they had bloated capitalization structures and there was little appetite to fund them further privately," Booth said.

Among the companies trading below their IPO prices are San Diego companies Sophiris and Biocept. Sophiris went public in August at $5; it closed Friday at $3.96. Biocept debuted at $10 in early February; it closed Friday at $9.06.

Biotech analysts say when the IPO market gets many underperforming stocks, it can signal a closing of the offering window. So far there's no sign investors are losing their appetite.

But even an above-IPO price isn't good for the pre-IPO investors if they have lost money, Booth wrote. He said that "most Ambit private investors were underwater at the IPO and remain significantly so. This challenging theme holds true for Regado (NASDAQ:RGDO), Sophiris (NASDQ:SPHS), and Biocept (NASDAQ:BIOC), among others."